What You Need to Know Before You Renovate

Taking on a renovation project is a huge deal. Even if you have completed a renovation in the past, every new development brings a host of new elements and potential issues. As a homeowner, you might already be aware that insurance is essential. After all, it protects your physical dwelling from damages in addition to any contents within, as well as your personal liability. If anything unexpected happens, you’re good. Right? Well –

You have home insurance, but does your contractor? Assuming that you aren’t doing the renovation yourself, you’ll want to ensure that the contract you are hiring has proper insurance. This is because a contractor’s insurance policy will cover the workers that are completing the renovation, as well as any damage that might occur to your property throughout the process.

Insurance can get overlooked when renovating, partly due to the fact that there’s just so many other things going on. Timeline, budget, details, bylaws – but insurance isn’t something to be overlooked. If you hire a contractor who isn’t sufficiently insured, your home might be at risk.

Why your contractor needs insurance during renovations

Depending on why you are modifying your home and what renovations are being done – whether it’s a routine upgrade to adhere to bylaw regulations or a fancy makeover – your project may require special insurance and licensing. If there is any major structural work, any roofing, plumbing, or even electrical work, your home should have insurance to back it. Your contractor should as well. This is because if anything goes wrong on the job, a contractor’s insurance will pay for the damages. Without sufficient insurance, you may not have coverage.

Your contractor should have adequate contractors insurance, including both liability and worker’s compensation insurance. Ask them for proof. If they are a reputable company, they shouldn’t hesitate to provide you with the necessary documents. If they push off the idea or say they cannot provide proof, you should look elsewhere for a company that can confirm insurance coverage – even if they cost a little more! It’s better to be safe than sorry. If you are choosing between multiple contractors, take your time and browse through their portfolios, read referrals from previous clients, and ensure that they have the correct licensing for the renovations you want to have done. Mistakes happen, even with professional contractors. It’s better to have a mistake remedied with the right insurance by a reputable company than to have a poor job done by a “cheap” contractor and have to fill in for any mistakes or damages that may occur on the job. Make sure you’re aware of your rights when starting a home renovation project.

After the fact: your renovations can affect your insurance

Again, depending on the nature of the renovations you have completed, your insurance may be impacted. Your premiums could rise, or on the other hand, they could decrease because your home is safer. It depends on the renovation. Adding a pool can impact your home insurance rates negatively because it’s an increase in liability risk, whereas updating your older heating system can reduce the risk of residential fire. It’s essential to get in touch with your insurance broker after a renovation has been completed – which is something that many homeowners avoid because they’re worried about increased costs! – and inform them of the work that has been done. In some cases, your overall home’s value will have increased because of the renovation, which means you may need to increase your overall coverage so that it reflects your home’s replacement value. This will save you from having to make up the difference if your home is damaged and your coverage doesn’t accurately reflect its value.

A rise in costs isn’t always a bad thing. For one, your home has probably increased in value, which means that when it’s time to sell it will reap a higher ROI. On the other hand, nondisclosed home renovations can also risk claims being denied or home insurance being voided altogether. It’s better to inform your broker than to stay silent.

Coverage if you do your own renovations

DIY renovations may still necessitate a call to your insurance provider before you even consider beginning the work. This ensures that your coverage remains intact throughout the renovation process. That being said, if your renovations are extensive, you may need to change your policy altogether to a “building under construction” and acquire builder’s risk insurance.

It’s important to be diligent and mindful about ensuring that your insurance is accurate and reflects the current circumstances of your building so that if anything falls short or goes wrong, you have coverage. Discuss with your insurance broker before and after the fact. You’ll never know what you might miss out on, which could risk your home insurance claims being denied or your policy being voided altogether.

A last note –

One last thing to keep in mind is that if your renovations are extensive enough to where you are not occupying your home during the period it is being renovated, and it is left vacant, you must inform your insurance broker and discuss acquiring a vacancy permit. An unoccupied or vacant home is cause for void insurance. Burglary is a prominent threat, and without informing your insurance broker about your vacancy, an instance of theft or vandalism may not be covered. Houses under construction or that are having renovations done are appealing for thieves because potential entry points may be left unlocked or available.

It is always advised to maintain clear and constant communication with your insurance broker with any major life change or insurance-qualifying event. Remember – everyone needs insurance that is involved with your renovation project, not just you! You should update your broker before and after renovations are completed. If you have any questions or concerns or are curious about what renovations may qualify you for a home insurance discount, discuss with Excalibur Insurance’s experts today.